Long-time component supplier and Apple partner Foxconn is reportedly preparing a WAPI-based iPhone handset that will be distributed to China Unicom. Per Cloned in China, WAPI is the local wireless standard that is compatible with Wi-Fi, unlike the current iPhone version which omits the Wi-Fi functionality due to government regulations.

The lack of Wi-Fi has been considered a significant factor in the modest sales numbers following the iPhone launch in China. China Unicom reportedly sold only 300,000 iPhones by the end of 2009, moving only 5,000 handsets sold during the launch weekend.

Instead of buying the official Chinese version of the iPhone, which begins around US$1,025, many customers instead opted to import a standard iPhone from another country and unlock the device upon arrival.

Final pricing and launch information for the WAPI iPhone remains unknown.

Most Chinese are getting their iPhones out of Hong Kong where they are sold factory unlocked without and without a carrier contract. These Hong Kong phones are available all over the place in China for less than Apple sells them online in Hong Kong as the resellers in HK are discounting them so even with a mainland markup you pay less than directly from Apple. If the China Unicom version of the iPhone comes with wapi (china’s homegrown standard) and does not also include the international wifi standard, this practice will continue in full force as the chinese consumer could care less about wapi – noone wants or uses it so they will continue to buy imported phones in mass.

Most Chinese are getting their iPhones out of Hong Kong where they are sold factory unlocked, and without a carrier contract. These Hong Kong phones are available all over the place in China for less than Apple sells them online in Hong Kong as the resellers in HK are discounting them so even with a mainland markup you pay less than directly from Apple. If the China Unicom version of the iPhone comes with wapi (china’s homegrown standard), and does not also include the international wifi standard, chinese consumers will continue to buy imported phones as they could care less about wapi – noone wants it or uses it, and your wapi high speed would be useless if you traveled outside China.